Your theory may work, many FSBOs do pay to buyers agent to get the house shown.
What is normal commission in your area? Right now as a seller, I'm negotiating a sale with me paying 3% to the broker, but he solicited me, I am not on the market.
A few months ago I had a buyers agent offer 2% to me for another transaction when I was not on the market.
I am contemplating making a direct offer on another previous for sale property, but subtracting commission amount for the offer.
Many people want their agent to work for them, but don't expect to pay them directly.

You can definitely do that, but do be aware that this doesn't mean you're not paying for the buyer's agent--the buyers will just deduct that much from their offer. If they're willing to pay $xx for the house, that's how much they'll pay, whether it's to their agent or to you. So it sort of amounts to the same thing. You may find it works better to pay the standard commission in your area (3% where we live, but varies) in the interest of getting the home shown and sold, but if you're not in a rush you can also just see how it goes. Just be sure to put whatever you're doing in the listing ("will/won't work with buyer's agents"). That said, there can be benefits to a lower sales price, too (versus higher that includes commission), so it just depends on what works best for you.

Many buyers would prefer the agents commission to come out of the sales price so that it can easily be included in the mortgage.

We are under contract FSBO (we are the seller). Our buyer does not have an agent and I sort of wish she did. She has never bought a house before and is so nice. I have had to really walk her through a lot which is fine but it is weird because at times I've offered her things she didn't even ask for because I know if she had a realtor she'd be negotiating a much better deal for herself. For example I offered to pay half her attorney's fee not to exceed $500 and I also offered to pay all the title insurance. She was grateful but I feel bad that she didn't have anyone on her side to tell her to ask for those things. Also her attorney makes me crazy and the smallest of changes take days to complete. I know if she had a real estate agent it would have moved along much faster. That being said we did work out an amicable deal and both sides are satisfied.

When someone wanted to see our home and they had an agent I said that everything was negotiable. That left an open door for any and all things. I was really annoyed though at the number of buyers who contacted me directly and then wanted to include their realtor after the fact. I feel like if you want to use a real estate agent they should communicate with the seller on your behalf.

I personally think your SO has shut out potential buyers before your house is even on the market by taking this stance. Suppose a buyer offered you $100,000 (made up number) and asked that you pay a 3% commission to his agent. You "net" $97,000. Another buyer, without an agent, offers you $95,000.

It would be foolish to take the $95,000 just because your SO doesn't want to pay a buyer's agent.

My opinion--one needs to look at the total offer before making decisions about what one will/will not pay.

The same principle applies to buyer's closing costs. Sellers that refuse to pay any closing costs right away are not looking at the big picture and the real goal: getting the house sold.

This post was edited by rrah on Wed, Apr 30, 14 at 7:22

If a buyer buys a house FSBO, they assume that they will somehow benefit from the seller's saving of the customary commission.

nosoccermom - I completely disagree. FSBO is strictly for the benefit of the seller - otherwise why would any sane person put themselves through all the heart and head ache. I sure as heck didn't do all all the work to sell my house myself to then pass the benefits onto the buyer. I did it to benefit myself only.

I can understand where you're coming from, especially since it sounds like you have/had to do a lot of hand holding with your buyer. But if you look at it from the point of view of the buyer: Why would a buyer want to go through all the hassle if there's no benefit for him/her? A seller's commission to his/her agent is shared with the buyer's agent, who at least to some extent represents the buyer's interest. So why would a buyer basically pay the seller's full commission and not get any of the benefits of a FSBO deal?
As a buyer, I know the seller who has a RA nets 188K on a 200K sales price. So, are you saying that a FSBO seller would/should not accept a 194K offer?
This seems just as unreasonable to me as a buyer who would expect to pay 188K because the "seller saves the commission" and thus should be satisfied with 188K.

Of course, in my area, the vast majority of FSBO properties are vastly overpriced and end up being sold ultimately with a RA for substantially less.

This post was edited by nosoccermom on Thu, May 1, 14 at 10:13

Why would a buyer want to go through all the hassle if there's no benefit for him/her?

- Because they want your house.It's that simple.

The seller's commission is usually split between both agents. The buyer would not be required to pay the full commission, just the portion normally paid to the buyer's agent. And honestly I would have paid some money to a buyer's agent, but not a full 3.5%. Especially for the folks who found my house on their own and contacted me outside of their agent. I would have probably offered $1,000 towards the buyer's agent to help with paperwork and to assist the process moving forward smoothly.

Commissions to REA's are 100% negotiable. Yes, there are rates that are typical but they are certainly not required. An agent working with a buyer is working on the buyer's behalf - not the seller. So as the seller why would I pay them? As I said earlier, especially if the agent is not the one who found the property for the buyer.

I have a great REA and am using her as my buyer's agent on the house I am purchasing, and I would recommend that anyone buying a house use a REA. However, as a seller I did not think it necessary to use a REA. The house we are purchasing is a stretch for us and the only way to make the numbers work was to cut out the REA on the sale of my home, otherwise there would not be enough of a down payment for us to afford the mortgage. My REA completely understands this and she knows that it is in her best interest that I sell FSBO - otherwise I won't buy the new house and she won't end up with any money. Additionally, she has been very gracious and helpful giving me advice on the sale of this home - again because she knows it is in her interest to do so. I work in a very competitive and paperwork heavy sales industry already so making the switch to sell my house was a little easier for me than it might be for others.

I guess I just don't see why any potential savings on commissions should be passed onto the buyer, when the only reason a seller does FSBO is to net more proceeds out of the sale.

---As a buyer, I know the seller who has a RA nets 188K on a 200K sales price. So, are you saying that a FSBO seller would/should not accept a 194K offer?
This seems just as unreasonable to me as a buyer who would expect to pay 188K because the "seller saves the commission" and thus should be satisfied with 188K.---nosoccermom

This. That you do not seem to grasp of the above concept is one of the reasons I disliked dealing with many FSBO sellers. Even if I wanted the house, if my read on the FSBO seller was similar to your vibes, I would deduct $3-6K, or more, from my offer simply because the odds of a big hassle to purchase the house are increased and the chance of a deal going through is less certain. I know anything on the inspection report is going to be a battle, no matter how legitimate the request, so I have to make sure my opening offer will include an allowance for the value of the estimated funds necessary to cover possible repairs from my own pocket and still be at, or under, what I consider to be a fair price for the house. I know up front there is zero chance of a seller agent's voice of reason kicking in to help complete the deal. It's that simple.

That isn't to paint a swath for all FSBO sellers. I have read quite a few lovely stories from FSBO sellers and buyers in the GW forums. Unfortunately, similar to nosoccermom's market area, the FSBO sellers here are overwhelmingly out of touch with realty reality.

If you're not offering a commission to the buyer's agent, the vast majority of buyer's agents are not going to show your house.

It'll most likely cost your more than it will save.

Who pays the realtor (seller or buyer) is really irrelevant.
The fact is, there is only one pool of money.
Whether that whole pool is given to the seller and the seller pays the agent or the buyer pays the agent and offers the remainder of the money to the seller ... it's the same thing.

The pool doesn't grow or shrink depending on who is paying the realtor.
All that matters is what the net gain is for the seller and the total price for the buyer.

At the end of the day, the price of the home is set by what the buyer is willing to pay. In a seller's market, that might mean that FSBOs take less of a hit on price than they do in buyers' markets. But even in our very strong seller's market, FSBOs typically go for 10-20% less than similar homes listed by agents, which is a bigger gap than the typical 6% commission here. I can't say whether that's because buyers are offering less on these homes expecting hassle or because they are factoring in a commission that they are paying separately or because agents are doing a better job marketing the homes to a wider group of bidders, or if it just happens that people who choose to go FSBO also have slightly less updated homes or what-have-you. Point is just that it isn't the seller who gets to decide who benefits from the reduced or no commission--it's the buyer.

Be back later...

This post was edited by ncrealestateguy on Thu, May 1, 14 at 18:01

I think some sellers do FSBO because there is not enough room when selling to pay an agent for many people they do not have enough equity,

Yes that's our exact situation. Why would anyone do FSBO if not for the net proceeds? This is why the discussion of passing on savings to the buyer is so confusing for me. Why would any seller do that? If I FSBO and end up with x dollars or I can use a REA and still end up with x dollars then of course use a REA. Why do the work yourself? Now if I FSBO and end up with y dollars then it makes sense to do it.

I think people here are just trying to tell you how most buyers see a FSBO transaction... in that they do expect a piece of the action. That's just how most people are.

Bottom line is that everyone is greedy. ;-)

Right--the issue is not that anyone would voluntarily take less if they could receive more, but that in many areas, the trend is that buyers "discount" FSBOs and are not willing to pay as much as they would for the same house with an agent. You don't really have any control over that; the best you can do is look at the other FSBOs in your area and see what they sold for relative to the competition. If they are closing at the same prices as homes with agents, you're probably fine.

Consider that even if you and your buyer agree that your house is worth, say, $200K, if the buyer has to pay $6K to their agent, they will offer you $194K, because otherwise they're paying $206K for a house they think is only worth $200K. Why would they want to do that, any more than you would want to turn over $6K of your proceeds to their agent? If they're not already working with an agent and are deciding between two houses that they think are worth $200K but for one they could have an agent representing them and for the other they'd have to figure it out themselves, they might well choose the one they could bring an agent to. Now, could be that you just need to get $200K in proceeds and your buyer thinks your home is worth $206K so they're willing to pay your price plus the commission on the side or to be unrepresented because they're getting your house for less than they would otherwise pay. It's just that you don't have much control over that. If there are no agents at all, you may need to be prepared to split the savings with the buyer to get the house sold.

louislinus,

Your way of thinking would apply if a house had a value that was set in stone. The fact is, a house sale is a negotiation and the price is only what the seller and buyer agree on.

If all of your buyers feel like they should pay less because it's an FSBO, then you aren't going to be able to pocket ALL of your savings by going FSBO. Unless you can hold out for that one buyer who doesn't care.

I think typically most people would expect both the seller AND the buyer to benefit financially by FSBO. Not just one or the other. But obviously it depends on the specific buyer and seller.

Most buyers automatically take the commission off of the FSBO offer so I never see where an owner gains anything at all.

Saying this, we sold our last house as a FSBO simply because our listing had just expired. The buyer got a great deal because we didn't have to pay a Realtor but we didn't save anything.

Most agents and buyers bypass a FSBO entirely rather than deal with some of the attitudes expressed in this thread. Life is too short for that hassle.

We are in the process of selling 2 houses ourselves.

One we listed on the MLS using a flat-fee service. I think if you list on the MLS, you are required to pay at least some commission. We are paying 2.5 percent to the buyer's agent .

The other, we listed on Zillow and got a buyer w/ no agent so there are no agents involved in the transaction at all.

To be honest, I kind of wish that the buyer of the 2nd house had an agent, even if we ended up having to pay the commission (its a $375K house so that wouldn't be a particularly small commission). There was a ton of work preparing contracts, we're having to coordinate everything w/ inspection, appraisal and through all this, I still don't have 100 percent confidence that this deal is actually going to get done despite the fact that we have signed contracts.

W/ the agent, she's pretty much taking care of everything and I think she's pressing the buyer to move forward more b/c she wants the commission so I have more faith in that deal...